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July 21, 2008 --- Vol. 14, No. 80July 2008

Williams Alaska seeks rehearing of FERC decision on pipeline tariffs

Williams Alaska Petroleum Inc. filed a request for rehearing today with the Federal Energy Regulatory Commission of part of the federal agency’s June 19 decision overturning interstate rates charged on the Trans-Alaska Pipeline System in 2005 and 2006.

FERC upheld an administrative law judge’s ruling that the pipeline tariffs “were not just and reasonable” and ordered limited refunds to shippers who had overpaid.

Williams Alaska is seeking a rehearing on part of the decision that rejected a request from Flint Hills Resources Alaska LLC to refund one-half of some $1.5 billion in Dismantlement, Removal & Restoration fees, plus interest, that the carriers collected.

Flint Hills argued that the refunds be given to past shippers in the interest of intergenerational equity due to the unsettled nature of the DR&R cost issue.

In her May 17, 2007, decision, the law judge said refunds of DR&R fees would be premature, since the ultimate cost of DR&R for the pipeline hasn’t been determined.

Williams Alaska asked FERC to address the principle of intergenerational equity as a basis of just and reasonable rates; to recognize the fact that the Flint Hills’ proposal is not really a refund as that word is generally used with respect to pipeline rates; and to realize that it is not necessary to know the precise amount of the DR&R costs at the end of the life of TAPS in order to be fair to all of the shippers throughout the life of the pipeline.

Unless $750 million, plus interest, is returned to shippers who paid DR&R fees during the first half of the pipeline’s economic life, they will, in effect, end up subsidizing use of the pipeline by shippers during the second half, the company said.

Williams Alaska said the TAPS Carriers will still recover the full principal amount for DR&R costs, about $1.5 billion, before they have to engage in the TAPS’ end-of-life DR&R.

See full story in July 27 issue of Petroleum News, available to subscribers online at noon, Friday, July 25 at www.PetroleumNews.com

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